Currently, there are 560,000 shares outstanding at $85 each. There will be 65,000 new shares offered at $84 each. Calculate each of the following:

• The new market value of the company.
• 560,000($85) + 65,000($60)
• 47,600,000 + 3,900,000
• = $51,500,000
• The number of rights that are associated with one of the new shares.
• The ex-rights price.
• The value of a right.

• The new market value of the company.

• 560,000($85) + 65,000($60)
• 47,600,000 + 3,900,000
• = $51,500,000
• The number of rights that are associated with one of the new shares.
• 560,000 / 65,000
• Rights per new share = 8.62
• The ex-rights price.
• $51,500,000 / ($560,000 + $65,000)
• $51,500,000 / $625,000
• = $82.40

• The value of a right.
• $85.00 - $82.40
• = $2.60